By Bill Rusteberg
You don’t need a consultant when you fully-insure with a BUCA. You are wasting your money if you do.
BUCA’s are insulated. Rigid. Great at three card monte. They always win and never lose. And they know how in ways your mother warned you about. Remember Eddie Haskell?
Just about the only thing a consultant can do is negotiate lower rates or better benefits, or both. Isn’t that what they are supposed to do? In the fully insured world that’s an impossibility because consultants can’t change contracts, rating formulas, or rigid state filed benefits.
But they can lower rates, get better benefits. “Yes, my consultant got Blue Cross to lower their renewal for better benefits!” is music to corporate ears. Perception is reality.
A former BUCA sales guy now consultant knows better. It’s amazing what you can learn from former BUCA people after they undergo cult intervention.
“It’s all bullshit” says Bill. “We played plan sponsors like a fiddle. We made them feel like winners, beating us up on renewals, giving them lower rates and better benefits at the same time. But in truth, we weren’t. Our renewal strategy was pre-determined, a dance well rehearsed. We won all the time while the client believed the opposite.”
How is that possible we asked.
“I’ll make it pithy” said Bill. “We had the pen worth 5%. That was ours to use freely when needed. But many of us, knowing some clients loved to negotiate, we turbocharged our pen to 10, 15 or even 20%. Our sticker price just got inflated, locked and loaded, a gift for the benefit of skilled negotiators looking for value based relevancy.”
“This was especially valuable when renewing public sector groups. We knew public bidding was always a threat to retention and we knew competitors would be shadow pricing our renewal rates. What they were actually chasing were inflated numbers that magically reduced at bid opening. Competition hated us. Their underwriters never trusted our renewals which always made them more conservative than they needed to be. It’s a game of three card monte and we seldom lost.”
But how can you gift better benefits at no additional cost? “It’s easy. We used a portion of the inflated renewal spread towards better benefits. For example going from a $1,000 deductible to a $750 deductible is worth 1%. I’ve inflated the renewal offer by 10% so I have plenty of room to “negotiate” said Bill.
Plan sponsors don’t need a consultant to negotiate fully insured BUCA renewals. They can do it themselves just like they do buying a car. They know the sticker price is there for one purpose only and has nothing to do with actuarial accounting.
“I’ve worked with hundreds of plan sponsors over the years and have met some of the finest. It was always fun working with them, the back and forth, a tap dance enjoyed by both. Ability to think quickly, planning the next three moves in advance while the other side was a step ahead of you. One who comes to mind was the owner of a chain of pharmacies in the Lower Rio Grande Valley. He beat me every renewal!”
HOMEWORK READING ASSIGNMENT: Confessions of a Reformed Health Insurance Broker – From Innocence To Darkness
